Arbitration in Vienna dismissed the claim of the company Mr. Deripaska to Montenegro

Arbitration in Vienna dismissed the claim of the company Mr. Deripaska to Montenegro© Fotolia/ Sebastian Duda

International arbitration UNCITRAL in Vienna dismissed the claim of the Central European aluminum company (CEAC), controlled by Russian businessman Oleg Deripaska, the state of Montenegro, told Montenegrin Ministry of economy.

«All claims of Ceaca in the arbitration process against the state of Montenegro rejected, this is the final decision of the Arbitral Tribunal UNCITRAL in Vienna», — stated in the message.

The company Deripaska — the Russian-Cypriot, CEAC and En+ Group — about three years ago started the proceedings in international courts against Montenegro due to the loss of their assets in this country: once launched in 2013, the government bankruptcy «Kombinat aluminium Podgorica» (CAP), which was ruled by ZEEK («a daughter» En+). The debt CAP at the time was estimated at about 350 million euros (about half — in front of ZEAK and structures of En+).

Through arbitration (UNCITRAL ICSID in Vienna and in Paris) and the structure of Russian businessman demanded from the Montenegrin compensation for damages in the total amount of about 900 million euros.

A majority shareholding in KAP and the associated «bauxite Mine Niksic» Deripaska acquired in 2005. Since then, between Russian investors and the Montenegrin authorities repeatedly had mutual claims. In particular, the Montenegro allegations of falsification of financial reporting during privatization Capa, but the parties settled the dispute in 2010 with the signing of the settlement agreement.

The reason for filing a lawsuit in the Vienna arbitration were the numerous, according to CEAC, of a violation by Montenegro of the terms of the agreement on the CAP that led to the bankruptcy of the plant.

ZEAK: frustrated neutral solution

ZAAK, in his reaction said she is disappointed by the decision of the UNCITRAL Tribunal, but considers the claim justified, since the Tribunal, in the opinion of the company, concluded that Montenegro had violated the settlement agreement by the CAP. In addition, the Tribunal did not doubt the claims of Ceaca, according to which Montenegro committed misconduct and violated local bankruptcy law.

«The Tribunal concluded that Montenegro had violated the settlement agreement CAP, the mouthpiece is not paying the full amount of the subsidy for electricity that was promised in paragraph 11.3 of the settlement agreement, and that Montenegro has to pay Capa an additional amount of 8.72 million euros», — stated in the message of TEAK.

The company said that as one of the largest creditors of the Cap, I will try to get the money in full.

However, according to the judges of the claims to Montenegro should be considered in the courts of this country, and not in arbitration. In particular, the Tribunal decided that the claims of Ceaca that Montenegro, declaring the bankruptcy of the plant in July 2013, has violated its obligations are outside the scope of the settlement agreement and, therefore, outside of arbitration. The Tribunal said that these claims should be resolved in the courts of Montenegro.

«While we are disappointed to be broadly neutral by the decision of the Tribunal, we see confirmation of the legitimacy of his claim to two key elements,» explained Director of public relations of the company, CEAC Andrew Petrushinin.

According to him, first, the court concluded that Montenegro had violated the settlement agreement by not paying of 8.72 million euros of subsidies for electricity. Second, as noted by Petrushinin, the Tribunal rejected the main elements of the requirements due to misconduct and violation of the law on bankruptcy from Montenegro, but «said that these claims do not fall within its jurisdiction».

In this regard, the representative of ZEAK pointed out that the legal system of Montenegro is not sufficiently developed to address these complex issues in this case and this is because of the extremely weak rule of law in the country, the company turned to international arbitration.

«To a large extent discouraged by the suggestion of the Tribunal that the proper place for a decision for some of these claims is the court of Montenegro. The court also took the opportunity to help Montenegro to improve and enhance their trial practices,» said Petrushinin.

Arbitration in Vienna dismissed the claim of the company Mr. Deripaska to Montenegro© RIA Novosti. Alex Codecoverage in Photobacterium of the company «RUSAL» Oleg Deripaska during a TV debate CNBC «Structural reforms and anti-crisis policy in Russia. what’s next?» during St. Petersburg economic forum
Montenegro is satisfied with the outcome of the arbitration

According to Montenegrin authorities, at the end of the proceedings, TEAK obliged to pay 259 thousand euros as a penalty for violation of investment obligations and 29 thousand Euro fine for violation of the obligations of filing annual report on investments. On both amounts would be charged interest for overdue payment with effect from 30 January 2015 until date of payment.

«The decision of the Arbitral Tribunal finally confirmed that Montenegro against Ceaca and En+ Group did not violate the settlement agreement, but rather what ZEEK was the one who had breached its obligations under this agreement», — stated in the message of the Ministry of economy of Montenegro.

The debate continues

Obankrocheny aluminum smelter for more than three years continues under external management, and disputes between former owners and the state around it continue.

In December 2016, President, En+ Group Oleg Deripaska as an individual filed a lawsuit against the state of Montenegro for hundreds of millions of euros due to the illegal expropriation of their investments in this country. Businessman requires arbitration against Montenegro according to the rules of the UN Commission on international trade law (UNCITRAL) and refers to the bilateral investment agreement between the Russian Federation and the Federal Republic of Yugoslavia, which was signed in 1995.

The arbitration Tribunal of the International centre for settlement of investment disputes (ICSID) in Paris in 2016, dismissed one claim, TEAK, declaring that it did not have jurisdiction to consider it. Now the Russian-Cypriot company is seeking the cancellation of this decision.

In the District court in Nicosia (Cyprus) from CEAC filed a lawsuit against the state of Montenegro, the bankruptcy Trustee Veselin Perisic Capa and the Montenegrin state-owned Montenegro Bonus (operated the plant from 8 July 2013 to 19 July 2014).

Mutual claims also continue to consider the Montenegrin courts. The authorities of Montenegro in the official reports deny guilt, claiming that the bankruptcy of the «Kombinat aluminium Podgorica» was conducted in accordance with local laws.

CAP was once the largest enterprise in Montenegro, producing 10 thousand tons of aluminum monthly, occupying 51% of the total exports of the country and about 15% in the GDP of the state. Capa is now the property is owned by the local businessman Veselin Pejović. As he previously told the media, the monthly production of aluminum is 3.2 thousand tons.